The technology of blockchain has a huge potential for positive social impact in the future. From big-data sharing across medical sectors and direct access to funding for charities, blockchain has the opportunity to alter some of the fundamental processes in modern life. Whilst many people know blockchain only for bitcoin, it also has the ability to challenge traditional financial institutions and create positive social impact.

The outlook for the future of blockchain in Asia is strong with a desire for higher levels of financial inclusion and transparency driving the industry. Governments and international companies across the region have committed to exploring the potential of the technology and are beginning to realise the benefits. A recent study by IT services and consulting firm Cognizant titled ‘The Future of Blockchain in Asia-Pacific’ found that fintech financing across the region was higher in the 2015-2016 period than in both the US and Europe.

Blockchain is a digital ledger of economic transactions distributed across a community-wide network. The network is shared amongst the users and cuts out the necessity for a central authority agency. Banks are no longer necessary to carry out transactions or provide financial security, as with blockchain technology these abilities are put in the hands of the user directly. The industry is driven by the necessity to collaborate to regulate and verify the transactions data.

The Asia-Pacific region is booming with blockchain start-ups right now which are facilitated by global clients adopting the technology and a forward looking regulatory environment. It’s not surprising that as traditional financial institutions are poised for a major disruption by blockchain, they are also the biggest sector to move on the technology. In fear of being left behind, Cognizant found that 88 percent of the survey’s participants view blockchain as important or critical for the future of the financial industry.

Asia’s high adoption of blockchain is also due to local governments positioning themselves at the forefront of the industry. With the rapid growth of the middle class and growing demand for banking solutions, and a relatively high access to digital infrastructure, the region may be a testing ground for the blockchain based financial model. Governments in Hong Kong and Singapore have taken a proactive approach in promoting innovation and both Japan and South Korea have regulated the industry. In order to demonstrate leadership in the field and to further take autonomy over their institutions, China’s central bank has created an independent domestic cryptocurrency to ease financial regulations.

The technology is also fostering financial inclusion in locations where the standard is low. Approximately two billion adults globally have never been involved in the banking process before; a phenomenon that blockchain start-ups are focusing on. MicroMoney, a blockchain-based financial service, aims to provide access to people across Asia who have never banked before. Access to financial capital outside of the traditional financial system sets in motion an important shift in social norms.

Executive views

The study highlights the ways which the banking and financial sector are preparing for a wave of disruption. Over 480 senior executives from the banking and finance sector, including insurance companies across China, Australia, Japan and Singapore were involved in the survey. Nearly 75 percent of respondents said they were looking into the ways in which their firms could adopt blockchain technology into their institutions. Firms are busy setting up blockchain prototypes, creating hybrid ways to include the technology in their existing framework and creating environments that facilitate blockchain development.

Over half of all respondents interviewed indicated that their organisations were busy setting up blockchain labs and 60 percent were developing blockchain task forces. By getting ahead of the game, firms ensure that they are “well equipped to move forward as it moves toward the mainstream.”However, respondents still had their reservations about the new technology, with the report stating that, “It will take time for businesses to become comfortable with blockchain.” One of the main factors of why firms have been weary of the technology are concerns with security, with 71 percent of respondents naming it as the number one external barrier.

Issues surrounding security have always been concerning in relation to technology developments, and in the current climate it is exceedingly important. However, as Asia has been relatively delayed in its journey to digitalisation, the study suggests that the region can benefit from cybersecurity protocols in the developed world and bypass initial challenges.

Blockchain benefits

In Indonesia for example, with a largely offline population of whom 80 percent remain outside the traditional banking system, blockchain has huge potential, as it will allow users access to a digital currency for those who may not have a bank account. Those who are unbanked may be so due to the fact that they cannot provide proper documents and have no legal basis to access the system. This may be especially true for undocumented migrants, refugees and rural workers who are separated by both legal and spatial barriers.

Providing access to functions such as payments, cross-border remittances, loans and digital wallets to people stuck outside the traditional banking services allows those citizens greater financial freedom and security. Blockchain can also facilitate remittences and international transfers, a huge source of income across Southeast Asia. The positive social impact of streamlining access to these remittences on local communities cannot be understated.Beyond finance, blockchain leaders across the world believe that the technology could also be key in shifting gender bias in the workplace. Although the field itself is generally dominated by males with only an estimated 5.8 percent of back-end developers being women, the sector is growing and there is a talent gap which needs to be filled regardless of gender.

"Blockchain is tremendously community driven," says Pandu W. Sastrowardoyo from Blockchain Zoo in Indonesia. "Women excel in coalescing communities and getting multiple groups to get along, while Blockchain's main feature is to create partnerships between multiple competing interests.”

The technology is built on egalitarianism and fostering a community and if women do not participate at this early stage of the game, they may miss out on capitalising on the prospective future growth. "There is a still a dearth of women joining the tech workforce in developing countries," she says.

Blockchain disruption

Lastly, the study finds that firms are still attempting to understand the technology and how it will effect their business. Blockchain is set to disrupt multiple financial services and the way transactions are made, putting a new spin on the way that governance and regulation in turn effect transnational business. In order to better understand the new phenomenon and ensure that adoption is streamlined, firms are turning to professional services and consultancies to fill the knowledge gap, presenting a significant market opportunity.

“Given this uncertainty, we suggest that firms identify blockchain experts, consultants and thought leaders to help find and build a business case for blockchain. Moreover, providers can help financial institutions by sharing pilot data, providing connectivity services and offering guidance on choosing the right platform,” the report concludes.